You may have experienced this: You see a Facebook post advertising a product that gets your fancy, so you click on the link hoping you can make a purchase online, but only to get stumped—the site only accepts bitcoin payments. Indeed, more and more web services accept payments in the form of bitcoins. And while their value fluctuates as the market changes, there was news about a Norwegian man who invested around $26.60 in 5,000 bitcoins in 2009, promptly forgot about it, then in 2013 rediscovered he had made the purchase and was shocked to learn that their worth had jumped to $886,000!
We wouldn’t be surprised if your interest in bitcoins has jumped too. So what exactly are they, and how can you get them? Basically, bitcoin is a digital currency that you can use to pay for a variety of goods and services. It’s not unlike paper money, only it mostly exists as data, so you trade it online, peer to peer. Once you have them, you can then make an online purchase from a store that accepts them. Sometimes, it’s the only accepted form of payment so you have no choice but to acquire bitcoins. You can also sell them when their value gets much higher than the amount you paid for them, so you can make a profit, just like that lucky Norwegian.
There are two ways to get your hands on this digital currency, either you buy it or you mine it. Here’s how each goes:
Keep in mind that storing and using bitcoins requires wallet software or an online service. Wallet software means you need to install it in your computer and then you need to find a bitcoin seller, which can be complicated. An online service to create a wallet is simpler. Just follow these steps:
1. Sign up for an online service like Coinbase.
2. Click “Linked Accounts” from the lefthand menu, and add a bank account. (Note that it can take several days for the service to link a bank account.)
3. Once the link is in place, click the Buy/Sell Bitcoins link, which takes you to the default Buy Bitcoins section, and from there enter the number you want to purchase. It may take several days for the transaction to complete, but you will get a notification once your bitcoins are transferred to your wallet.
Simply put, you need to run software on your computer that can process mathematical equations. Solve one of these equations and you get a payout in bitcoins. The thing is, your computer is up against large groups of computers that are likely to solve the problem first. The solution is for you to join a mining group, but that means you only get a share of the payout.